What Sam Saw Today

I haven’t blogged for a while as I have decided to take some time off – but you know property is addictive!

I still find myself poring over the auction catalogues and oohing and ahhing…and occasionally (OK at least once per day) calling an estate agent – but at least its at a slower pace than previously.

This means I have more time to indulge in normal stuff that other people do – like watch Homes Under The Hammer! And while I watch these property auction goers, I can live vicariously through people buying and selling at auction without me even having to get in my car and see the property or get my cheque book out or find out my tools to renovate the places!

So it was with great interest when I watched Homes Under The Hammer on Iplayer which was broadcast on BBC One at 10:00AM Fri, 27 Jan 2012 which featured a flat in Catford, London.  Watch here

I was hugely interested because I had viewed the flat and had wanted to buy it in 2010.  It was a lovely one bed flat on the top floor of a handsome period building and in pretty good condition.  Here are the photos I took:

However, what put me off was the state of the communal areas and cracks in the walls. The whole building had a very uncared for feel and look and I was concerned what sort of bills may come in for the upkeep of the building.  I was also put off by the cars parked at the front of the building which had so many weeds growing under them I didn’t think they had moved for years.

So anyway, having viewed the flat and given my concerns about the communal areas of the building and the general fabric I decided against it – plus it was being sold at Savills who are well known for pricing low just to get you in. I didn’t really expect the flat to sell anywhere near it’s £80k guide.

So imagine my surprise as I was watching Homes Under the Hammer and it shows the buyer picking up the Catford flat at the Savills auction for a steal at just £91k.  He does a good job with a new kitchen and bathroom and when the estate agents come round they proclaim the new value to be £150k.

“What” I shout at the television “Not a chance!”

I remembered I had done research on the flat and the end value of £150k sounded way over the top to me.

Incensed that I had passed on this bargain I had to do more research to see if I had under-valued the flat.  Scouring the land registry figures I saw the guy did sell the flat, but not for £150k – he sold it for £132,500.  Which to be fair is a good price given what he paid for it and the cost of the renovations.

Obviously I over-estimated how much the poor condition of the communal areas and the cracking of the building may put people off – the guy did well on this flat.  It didn’t need much work and he pulled a good profit margin on a small project.

Am I tempted back to property on account of this? Well the same episode of Homes Under The Hammer did feature a couple of developers who pulled off a stunning chapel conversion in Chelmsford with a much more attractive £400k profit!

Like any other normal person on Christmas day there comes a point in the day when you think…“I wonder if the Amazon sales have started yet?”

And so as luck would have it, while I surreptitiously got my fix on the iPhone in the kitchen I saw before me they had “70% off Jewellery”, “60% off books” and “50% off Home & Garden”.  Unfortunately, being a landlord means the conscience pricks in – and I always seem to find myself choosing the sensible option over the more interesting option. So while I was rather tempted by the pretty, glittering diamonds of the 70% cheaper necklaces, I found myself clicking through on the discounted vacuum cleaner icon.

I know it’s sad.

It gets worse.

I have to admit I got excited.

Like some kind of porn addict I find myself salivating over the carpet cleaners and the reviews of a Vax W90-RU-B Rapide Ultra Upright Carpet and Upholstery Washer which was half price on Amazon – just £114.99 with free delivery.

I scoured the reviews for any landlords who may have bought…children, pets and wine stains are one thing – but how about tenants?

But I was bowled over by “Reviewer Love”. I daydreamed about “as new” carpets, about not “skipping” carpets, about not keeping Carpet Right’s share price afloat in 2012.

And then before me – on eBay-  I saw my Christmas present sent from Landlord Heaven: a Vax W90-RU-B Rapide Ultra, used once, 6 months old, located down the road in Cambridge and with a starting price of just 99p!

But what to do – the eBay auction had 9 days left to run, but the Amazon half price deal had only 8 days left…with limited stock.

And, of course, every person on the planet would want to buy one of these Vax machines when they read the reviews. How could I be sure that I wouldn’t miss the deal of the century? If I didn’t buy now I may end up Vax-less! I knew if I didn’t buy it right at that moment my Christmas would be filled with regret and 2012 would be awash with purchasing new carpets.

Fuelled by Christmas spirit and my then decided New Year’s Resolution to “buy less carpet” I quickly emailed the eBay seller explaining my predicament with the Amazon sales and his auction end date and emphasizing my need to buy this miracle machine.  Obviously, the seller was equally bored of the Christmas day festivities and had replied within moments.  After a quick-fire text exchange I am soon-to-be the proud new owner of a Vax W90-RU-B Rapide Ultra!

And so I have collected the miracle machine aka Vax W90-RU-B Rapide Ultra and it is soon to be put through it’s paces with it’s first tenant house this weekend.  I feel it’s a fair test – a property which until recently housed a single mother with 9 children (no kidding!). And I am looking forward to the promised vision of “as new” carpets which will be as sparkling and as glossy as a raven haired beauty on a L’Oreal shampoo advert.  Of course, I know this carpet cleaner won’t change my life…but in it’s own way I am expecting my own little Christmas miracle.

To Be Continued.

As Christmas draws ever nearer and I am still trying decide what gifts to buy my loved-ones (note to self – have probably missed Amazon’s delivery cut off date) I am faced with a bigger quandary at this time of year…and unfortunately it’s not of the “how-is-santa-going-to-deliver-my-presents-when-I-don’t-have-a-chimney” quandary.

Nope. My dilemma is very seasonal for this time of year – it is: Can you ever claim too many times on your buildings insurance?

Making an insurance claim,  in theory, should be pretty straight forward – I pay my insurance premiums and I am covered for the damage that has occurred. (I won’t bore you with the latest fiasco, this is the season to be jolly and hang tinsel on the tree). However, I feel I’m now on the cusp of being every insurance man’s nightmare – because “I-am-the-customer-who-always-claims-insurance”. And the fact is, insurance companies make their money from the “customers-who-never-claim-insurance”

So I didn’t mean to become the “customer-who-always-claims-insurance” it’s just I’ve had a run of bad luck in the last couple of years and tenants being the darlings that they are, have ensured that my properties have remained problem-free-only-in-my-dreams…

And so I spoke with my broker about what to do, and my concerns with being “the-customer-who-always-claims-insurance” and whether any company in their right mind would ever insure me again and he informed me it’s not about the amount of the claim that is the issue, but the frequency.  Which quelled one concern, as the claim would be for several thousands of pounds.  But, it opened another concern, because unfortunately, not only am I “the-customer-who-always-claims-insurance” I am, in fact, a regular. I am a frequent flyer. I am ”the-customer-who-regularly-claims-insurance”

I never wanted to be this person. I never wanted the loyalty card, bonus points and free desk top calendars that come with having my insurance broker’s telephone number on speed dial – I just somehow seem to have drifted into this territory.

And so my dilemma is – what is the probability if I claim again on my insurance, what is the likelihood that an insurance company will insure me again?  And if I find one that does, just what sort of mark up on the premiums am I going to have to end up paying? (bearing in mind I’ve already seen a 30% increase in the last 2 years due to my insurance incidents). And what choice am I actually going to have? Because the fact is, insurance companies insure those people who think something “may happen”, but it doesn’t. Insurance companies are not overly keen on people like me where something is “probably going to happen”.

So what to do? I have a valid claim.  But will the short term gain of claiming on the insurance for the damage be a long term pain?

Decisions. Decisions. Oh I would much rather be wondering what sort of mince pies to bake

Now there are many reasons why you should never trust an estate agent.  Consistently voted the least trustworthy professions I should know better…

So let’s begin.  It’s Wednesday 23rd November.  I see the below property going to auction with a guide of £65-70k and it’s being sold by Mortgagees Not In Possession.

I know it doesn’t look much. It’s described as an empty shop with one flat above in a place (South Ockenden) which sounds like the back end of nowhere.  However, let me enlighten you because I have done my research: it’s actually a popular commuter town, with pretty good property prices.  And in fact, the property comprises two flats, both of which have recently been refurbished and are let for a combined income of £1500 pcm.  Also, I can tell you the shop would rent for £800 pcm – so a combined rental of £2300 pcm against an auction guide of £65-70k.  That’s an incredible yield of over 40%!

In terms of value – you’re looking at c.£70k per flat and about £50k for the shop – so a combined value of £190k.  Plus, there is potential for additional income from the advertising board erected on the side of the property so we could say another £10k for that.  Plus, there is a rear yard/ storage area. All in, I would say we’re talking a total of £200k value.

So I’m used to tempting auction guide prices just to get you in – but this auction guide surprised me and I wondered if the guide was so low because they had only valued it as one flat rather than the two it had.  The catalogue entry stated that the auctioneers had not been able to gain access and the description was taken from the VOA website.

Doing my research I had discovered the building was on the market with a local estate agent with a price tag of £275k – far too top heavy so I reckoned that was the reason it hadn’t sold prior to being entered to auction.  I called the estate agent to find out what the issues are with the property, if they could get me in etc etc.  So imagine their surprise when they have no idea it’s going to auction and actually it was only put on the market a couple of days previously by the owner, who the estate agent I was speaking with, has known for a number of years, and who has bought and sold many properties with them.

Estate agent: “No, sorry you must be mistaken, that property is not going to auction”

Me: “OK, well this is the address I have – is that the same building you are selling?”

Estate agent: “Well, yes…but that can’t be it”

Me: “Well open this website to the auction page and tell me if this is the same building which they are selling which you are selling, it is a sale of Mortgagee Not In Possession perhaps that’s the issue?”

Estate agent takes web details and enters the site: “Well I never. Yes, this is the same building. Oh and it says it’s being sold by the mortgagees…hmmm that does sound odd. I know the owner and he hasn’t got any money problems and this property was only recently refurbished and let so I don’t understand this.  It really doesn’t make sense as we only took this on our books a couple of days ago”

Me: “Well, is it possible that perhaps the owner is having financial difficulties, but he didn’t want to tell you – and that is why he is trying to sell it – before if gets sold as a repossession?”

Estate Agent: “No, I really doubt that…but look I am going to call him now and find out more – give me your number and I’ll call you back”

*************Half an hour later***********

Estate agent: “I have spoken with the owner and he believes it’s a mistake, he has tried to call the auction house to find out, but they have closed at 5.30pm so he’s going to call them in the morning. He’s also going to speak to his business partner to find out what is going on, I’ll call you then when I know more – oh by the way I have said to him if he wants to sell quickly then I am more than happy to give him 70 grand cash – that’s a steal!”

Me: (feeling uncomfortable that I seem to have created a competitor) “OK that’s great thanks, speak then”

Now at this point my internal alarm bells should have been ringing.  If I owned a property, that unbeknownst to me was being entered for sale as a repossession in an auction, the first thing I would do is ring the bank to find out what on earth was going on!

Thursday 24th November – estate agent calls me and assures me it’s been a huge mistake, the property is not going to be sold at auction and the owner is now in talks with the bank and his business partner.  I call the auction house, as far as they know the property is still going to auction.  Hmm two very different opinions.

Friday 25th November – estate agent assures me the property is going to be withdrawn from auction, it’s all a big mistake and something to do with the business partner. Auction house still does not have any legal papers and so I am still none the wiser.

Saturday 26th November – Sam goes on holiday.

The following week I check online and still there are no legal papers available, the property is still showing as available in the upcoming auction, but at the same time is still showing on the estate agents site as for sale.  I think about what the estate agent has told me and figure that shortly the property will get withdrawn from the auction and that’s why there are no legal papers available. At the same time I also juggling the figures for an office block conversion we are proceeding on, so I withdraw my interest in the auction property so that I can properly focus on the office block – which is a receivership sale.

So now I am back from holiday and I am checking the auction results from the past few days…and you guessed it. It did go to auction. The estate agent was wrong.  I should not have listened to him. In fact, I bet he bid for it.  Whoever bought it, got a bargain. It sold for £80k. By my reckoning that’s over £100k profit when you split it and sell it on.  I should never have listened to the estate agent.  That just cost me a lost opportunity of over £100k.

That’s the question I find myself asking today…

As we enter the cold season, I am reminded of the horrible, horrible winter we had last year where we had a multitude of frozen pipes, broken boilers, upset tenants and my ever decreasing bank balance to pay the bills.  I remember at one point thinking to myself I would stop answering the phone. Every time I answered it, it seemed to cost me yet more money. Alas, ignorance was not an option…especially not when my tenants have me on speed dial and think nothing of bombarding me with their free annual text quota in a day.

And so with a heavy heart, I like many other landlords, are entering that wonderfully festive season which is traditionally known as Christmas to everyone else and T’is Season to be Jolly. Which in the landlord’s world – T’is the Season to Worry. Which in the plumbers world Ti’s Season To Plunder. Yes, for plumbers, winter is their peak season – this is the manual workers equivalent of City Boy Banker’s Bonus Month!

So when my kindly insurance broker called me to remind me it was that dreaded time of the year again – Insurance Renewal Time. I felt the sense of dread for the forthcoming cold season even more clammily around my neck…of course, it could have something to do with my annual premiums being the equivalent of a new car – or maybe I just need to get my boiler checked…

Anyhow as my broker is cheerfully telling me how this year I just have an 8% increase on my premiums (which I suspected I was meant to be grateful for) he then informs me of his new Christmas Selling Scam to fill his Santa Stockings. It’s Landlord Home Emergency Cover. I am aghast – am I not spending enough money with his company – and now he wants MORE!!! So I scoff and scorn about home emergency policies and bleet on about the cost and other such stuff. And then he stops me in my tracks when he tells me the price. It is a measly £59 including central heating cover per property. For the year. Yes, £59 for the year.

At such a tiny price there has got to be a catch. I mean this is £4.91 per month. So I ask him to send me over the policy details so I can check the small print. I then get onto the websites of Homeserve, AA, Swinton, LandlordCall, LandlordPlus and a million other sites which claim they offer Landlord Home Emergency Cover – there are a lot! And the price range varies – admittedly none of them as cheap as what’s he’s offered – but if I chose to I could spend 5 times more and go with Homeserve…for a pretty similar package.

So what do I get for £59? Well I get:

Plumbing and drainage: Sudden failure of, or damage to the plumbing and drainage system. This includes leaking pipes, blocked drains, water tanks and blockages in toilet waste pipes.

Gas & Electrical Supply: Sudden and complete failure or breakdown of the gas or electricity supply within your property

Pests: Professional extermination and control of pests in your home including cellars and outbuildings

Roofing: Damage to the roof of your home caused by storm or fallen trees or branches

Security & Glazing: Damage caused to external locks, doors and windows

Primary Heating: Complete failure or breakdown of either the heating and/or hot water supply provided by your primary heating system

3 Way Claim Helpline: A specific appointment time is agreed between the tenant and the tradesperson while on the phone to the claim helpline

Admittedly I can pull holes in the “emergency cover” and I can see limitations and exclusions where they will probably try and wriggle out of it.  But, you know I have had to shell out a lot for broken windows, burst pipes, broken boilers, smashed roof tiles from falling branches and a huge number of blocked toilet waste pipes over the last year!

And so I ummed and arrhed and asked lots of other landlords for their experiences. And I have to be honest I was undecided.  It sounded too cheap…and you know the saying “If it’s too good to be true…”

My broker usefully told me “It’s the sort of insurance that you don’t know you need it, until you need it”

Which, of course, I found extremely helpful (note sarcasm). And so I decided that for such a small amount of money I don’t expect much back. In fact, my expectations are so low that if anybody even answered the phone when an emergency happened I would think it was a minor miracle let alone anyone attending and even fixing the problem.

And so I have decided, it’s so cheap that I have to trial it. How can I not try it? At less than £5 per month it’s got to be worth a punt.  And so I am treating my experiment with Landlord Home Emergency Cover like a little test case – as if I worked at Which Consumer Research magazine or something.

Has it provided me with peace of mind for the 25% of my properties I’ve insured?  Well, at the very least, I have an emergency telephone number to give the tenant’s which is not mine…